ANNAPOLIS – Many counties will see significant cuts in some state grants, though the overall increase in state aid to local governments will rise.
Gov. Robert Ehrlich’s proposed 2006 budget earmarks $5.1 billion for counties and municipalities, up $396 million, or 8 percent, from the current fiscal year.
Most of that total — more than $4 billion — is assistance to public schools, according to a report by the nonpartisan Department of Legislative Services. Public school aid would increase by $392 million, or 11 percent.
Ehrlich has highlighted public school construction as one of the most pressing issues this year.
Funding for transportation projects also would increase by $102 million, or 22 percent, thanks to the restoration of a grant that had been cut the last two years.
Maryland’s 23 counties and Baltimore are to receive $554 million in revenue for road improvements from gas taxes and vehicle-title and registration fees. Counties receive the bulk of revenues from these “highway user’s fees.”
James Peck, director of research for the Maryland Municipal League, praised the administration for restoring those revenues. He said he expected towns and cities to fare better in 2006 than they have in previous years.
But some county administrators are concerned, as they were in years past, that they will lose major sources of revenue if certain state grants are cut or eliminated.
Salisbury Mayor Barrie Tilghman, the league’s president, told the Senate Budget and Taxation Committee on Wednesday that the restored highway user’s revenues had instilled a combined sense of “relief and cautious feeling of optimism” among municipal leaders.
But she said that most local officials are still considering raising property taxes — their chief source of revenue — if state aid is inadequate.
Sen. J. Lowell Stoltzfus, R-Somerset, defended the governor’s budget. He said the “unfunded mandate” of the Thornton public-school improvement plan forced aid cuts in recent years.
“That’s the major reason you guys are suffering,” Stoltzfus said to Tilghman and two other local officials on the panel.
One of the biggest targets for cuts is the fund that assists counties with large electricity-generating plants. Ehrlich’s budget cuts $30.6 million from the electric utility fund, which was enacted in 1999, around the same time the electric utilities were deregulated.
During the two previous legislative sessions, Ehrlich unsuccessfully tried to spike the fund, which helps 10 counties and Baltimore.
Charles County will not see $6.1 million in utility grant money. Most of that goes toward education. Administrator Eugene Lauer estimated that property owners would have to pay 2.2 cents, 1 cent more, for every $100 of assessed property value to make up for the lost revenue. So a home with a $100,000 assessed value would be taxed $2,200 — $1,000 more than the current rate.
But Lauer maintained he has no plans to raise the property tax rate.
“We don’t get that, it’ll be $1.3 million less that education is going to get,” Lauer said. But he added that it “doesn’t mean we’re going to go broke.”
Harford County Executive James Haskins anticipates rolling with the punch.
“We’ll absorb it,” he said. “The state of Maryland and county governments are partners. When one partner is ailing, the other partner has to step up and help out.”
Leonard Lucchi, director of legislative affairs for Prince George’s County, said the utility-grant cut — estimated at $7.7 million — will impede plans to hire more county police officers.
Prince George’s will see the greatest cut in total grants in 2006: nearly $20 million. About half of that will come out of Project Open Space, the perennial go-to special fund that the Ehrlich administration wants to wean Maryland from in the coming years.
In Prince George’s, a special education grant and the Challenge Grant for struggling schools was cut for a combined $2.6 million.
At a House Ways and Means Committee hearing Tuesday, budget analyst John Rohrer said the Challenge Grant, which serves schools in Prince George’s and eight other jurisdictions, has been gutted. It was worth about $3.8 million.
Calvert County, with one of the smallest populations of the 11 jurisdictions receiving the utility grant, stands to lose $6.1 million, the most per county resident, according to Legislative Services. Calvert County also is the home district of Senate President Thomas V. Mike Miller Jr., a Democrat.
Miller said he would fight to have the electric utility grant restored and criticized Ehrlich for the move.
“What he’s trying to force the Legislature to do is be the bad guy, take the money from some other very worthy cause and return it to the counties,” Miller said.
Miller also complained that the administration did not discuss the cut with local-government officials.
Budget Secretary James “Chip” DiPaula said the administration had had “plenty of conversations” with county administrators last year.
“When this tax grant came into effect, everyone knew that it would be phased out at some point,” DiPaula said.
House Speaker Michael Busch, a Democrat whose own Anne Arundel County stands to lose $7.8 million in utility-grant money, described the lack of communication as “a poor way to deal with your partners in the local county governments.”